March 2 (Bloomberg) -- Serco Group Plc, the operator of
London’s Docklands Light Railway, said 2010 earnings increased
21 percent as it developed new markets and won more business.

Pretax profit for the year climbed to 213.9 million pounds
($347 million) from 177.1 million pounds a year earlier, the
Hook, England-based company said in a statement today. Revenue
rose 9 percent to 4.33 billion pounds.

Local government authorities across the U.K. are dealing
with reduced budgets as Prime Minister David Cameron’s coalition
government plans to slash 81 billion pounds from public spending
by 2015. Serco is helping the U.K. government identify how
public services can be made competitive with more private-company involvement, it said in August.

Serco’s international business “has been the story for me
for 2010,” Chief Executive Officer Christopher Hyman said in an
interview. The company won a five-year order to run a monorail
system in Dubai and an order for hazardous-materials handling
with the U.S. Navy last year, according to the statement.

Contract wins in the U.K. included a 25-year, 650 million-pound environmental services deal with a local government, a 415
million-pound contract to operate a prison and a 10-year
agreement with King’s College Hospital, according to the
statement.

Sales Target

The company expects about 5 billion pounds in sales for the
2012 financial year, it said.

“It certainly won’t be a straight line to 2012, but we’ll
see good growth, some growth in the U.K., and that should be
enough to take us to that target,” Hyman said in the interview.

Serco rose as much as 25 pence, or 4.5 percent, to 579
pence in London, and traded at 557 pence at 11:15 a.m. local
time, giving the company a market value of 2.75 billion pounds.

The company’s order book fell to 16.6 billion pounds from
17.1 billion pounds as it reduced the price of some contracts to
meet government demands and removed an order for “flexible new
deal” programs which help unemployed people, Hyman said.

Britain’s government stopped the program, which will be
replaced by a new one in which Serco hopes to get work, Hyman
said.

Cameron said in 2009 he wanted to see voluntary groups and
smaller companies supplying more services to government, rather
than just “the big players.”

Hyman said Serco is talking to “several hundred” small
businesses and voluntary organizations about its work program
with the government and has formed a pathology joint venture
with the government. Only about 15 percent of the work that can
be moved from the public sector to private providers has been
shifted so far, he said.

“There’ll be enough work to go around for everyone,”
Hyman said. “Competition is good.”